Going Backwards

On the surface, it looked like one of those trends that would continue forward. As the ag retail industry entered the 21st century, one of the major buzzes among market watchers was the rapid rise of post-patent products and their eventual impact on the basic suppliers. Indeed, some analysts such as Harvest Consultant and Mike Buckley & Associates were speculating that by the end of 2007, post-patent products would make up approximately 80% of total crop protection product sales.

Given these projections for growth, CropLife® magazine was curious. Be­ginning with the 20th anniversary of our CropLife 100 survey in 2003, we started asking how many ag retailers within the CropLife 100 rankings were doing business with post-patent manufacturers. The numbers were incredible — 75% were, at that point. Through 2006, this percentage continued to climb — from 81% in 2004 to 86% in 2006.

Even more impressively, many of these same retailers viewed post-patent products as one of the major reasons for their crop protection product business spiraling downward in terms of profit margins. “The high percentage of generic product entries is causing price erosion,” wrote many a respondent on their CropLife 100 survey forms between 2003 and 2006.

Despite this fact, retailers continued to sell an increasing number of these products to their grower-customers without fail. The reason for this boiled down to one of giving the customer what he or she wanted. “Growers are no longer necessarily asking for brand names in their crop protection choices,” said Dave Coppess, vice president of sales and marketing for Heartland Co-op, West Des Moines, IA, in a 2005 interview with CropLife. “All they really want is a product that will help them get clean fields.”

A Bump In The Road?

Based upon this growth curve — coupled with the initial estimates for overall post-patent product market share — our staff expected the 2007 CropLife 100 survey to show post-patent product market penetration nearing the 90% mark, but certainly no lower than somewhere in the 80% range.

Surprisingly, this wasn’t the case. According to data from respondents, the percentage of CropLife 100 retailers doing business with post-patent products fell significantly last year — down 20% to 66%. Furthermore, market analysts expecting post-patent products to be the equivalent of 80% of total crop protection sales were way off the mark. Based upon the CropLife 100 data, generic brands represented only 22% of crop protection product revenue in 2007 among all ranked dealerships. There were, however, several CropLife 100 retailers with post-patent product percentages in the 50% to 60% range. One retailer even indicated that 75% of its 2007 crop protection product sales were generic.

Of course, these kinds of numbers beg a simple question — is the bloom off the post-patent rose? Not to be cliché, but the answer seems to be yes and no.

On the 2007 CropLife 100 survey form, we asked retailers a couple of follow-up questions regarding their post-patent product offerings. As for why these respondents are doing business with post-patent manufacturers when they perceive these products as “negatively impacting” their bottom lines, 72% indicated their grower-customers were “demanding” generics as an alternative to basic manufacturer supplied brands. Perhaps more surprisingly, 80% of those surveyed said that post-patent products offered a better opportunity for profit than basic manufacturer brands did.

While CropLife 100 retailers seemed pleased overall with the post-patent products themselves, the same couldn’t be said for the manufacturers of these brands. According to the survey, only 48% of the respondents said they “trusted” the generic companies with whom they do business. Interestingly, this is the same percentage of respondents that ranked the basic suppliers they do work with as “solid.”

Although it wasn’t reflected by a direct question within the survey, another reason for this sharp drop in post-patent product support among 2007 CropLife 100 retailers could stem from the companies themselves. After relative stability between 2005 and 2006 in terms of which ag retailers made the rankings, 2007 saw six new companies enter the list because of mergers and consolidations among existing players. Compared to the companies that vacated the CropLife 100, virtually none of the newcomers survey forms indicated that they handled post-patent products in their operations, thus depressing the overall percentage figure.

Making A Comeback?

Moving forward, the question now centers on if the 2007 post-patent product performance is a momentary pause on the road to prosperity or a reversal of fortunes. Based upon the evidence, it could be the latter. According to the 2007 CropLife 100 survey, 83% of respondents said that despite their grower-customers asking for generic products, they preferred to sell basic manufacturer brands instead. Of this group, 36% indicated they felt “strongly” about this business position.

Coupled with this view, basic manufacturers have apparently stepped up their efforts to protect their market shares within the ag retail community. This has included offering increased support and upgraded product offerings.

In his 2005 interview with CropLife, Heartland’s Coppess foresaw this kind of scenario playing out in the years ahead. He even predicted that today’s somewhat split marketplace would occur. “The branded folks will try to protect their market share at all costs, post-patent products will keep coming, and retailers will look to improve their bottom lines,” he said. “Eventually, a balance will be achieved.”

Leave a Reply

CropLife 100 Stories

Greg Musson, Gar Tootelian
CropLife 100Gar Tootelian Foundation Donates Half Million Dollars to Local School
August 16, 2017
Students at Immanuel Elementary are looking forward to the first day of school for two reasons this year. One, they Read More
Greg Musson, Gar Tootelian
CropLife 100Cause of Gar Tootelian Fire Under Investigation
August 7, 2017
Over one hundred firefighters and equipment responded to a four-alarm shop fire at the Gar Tootelian, Inc. (GAR) facility in Read More
CHS Primeland
CropLife 100CropLife 100: The Half-Way Report
July 10, 2017
For more than 30 years now, CropLife® magazine has regularly tracked the state of the ag retail marketplace through its Read More
Greystone Construction built the tension membrane fertilizer storage building (left) and steel seed treater building (right)
CropLife 100Pinnacle Plans President and CEO Transition
June 5, 2017
Pinnacle Operating Corp. has announced Kenny Cordell will be stepping down from his role as President and CEO in the Read More
Trending Articles
Iowa waterways
Stewardship2,600 Iowa Farmers Commit $8.7 Million to Water Quality Practices
August 9, 2017
Iowa Secretary of Agriculture Bill Northey announced Tuesday that a record number of Iowa farmers signed up to install nutrient Read More
Greg Musson, Gar Tootelian
CropLife 100Cause of Gar Tootelian Fire Under Investigation
August 7, 2017
Over one hundred firefighters and equipment responded to a four-alarm shop fire at the Gar Tootelian, Inc. (GAR) facility in Read More
Rob Versprille
ManagementCeres Solutions, North Central Co-op Merger to Bring New Opportunities for Indiana, Michigan Farmers
August 1, 2017
More than 40,000 customers and almost 9,000 Indiana and Michigan farmers will begin doing business with the new Ceres Solutions Read More
CPS-Norwood-and-Dupont-reps
Eric SfiligojA Message to Ag Retailers: Do Tell Your Good Stories
July 26, 2017
As the daughter of a peanut farmer, Krysta Harden, Chief Sustainability Officer for DuPont Crop Protection, understands the importance ag Read More
Tim Hassinger Dow AgroSciences President and CEO
Crop InputsDow’s Tim Hassinger Named President, CEO of Lindsay Corp.
July 24, 2017
Lindsay Corp. has  announced the appointment of Timothy Hassinger as president and CEO and a member of its board of Read More
Stewardship‘Gonna Fly Now’ with Environmental Respect
July 20, 2017
One of the most memorable moments in movie history occurred in the Academy Award-winning 1976 film “Rocky.” Haven gotten his Read More
Latest News
Greg Musson, Gar Tootelian
CropLife 100Gar Tootelian Foundation Donates Half Million Dollars t…
August 16, 2017
Students at Immanuel Elementary are looking forward to the first day of school for two reasons this year. One, they Read More
Water Drainage
StewardshipNew System Could Remove Two Water Pollutants from Ag Fi…
August 14, 2017
Algae blooms in the Gulf of Mexico use up the majority of the oxygen in the water, leading to massive Read More
Eric SfiligojThe Top 10 Crop Protection Companies, Post-Mega Mergers
August 14, 2017
Everyone loves a good Top 10 list. In fact, some prominent celebrities such as David Letterman spent much of their Read More
ManagementThe DuPont-Granular Deal, Dicamba Update, and Upcoming …
August 11, 2017
Matthew Grassi joins Paul Schrimpf for the second week in a row to talk about DuPont’s acquisition of Granular, as Read More
Soybeans weeds
HerbicidesOngoing Evaluation Key to Controlling Weeds, Improving …
August 10, 2017
As the sun bears down on record U.S. soybean acres this August, farmers keep their eyes on their fields to Read More
Young Corn Plants
Seed/BiotechMycogen Seeds Offers Novel Product to Battle Pythium, O…
August 10, 2017
After a season plagued by seedling diseases caused by cool, wet soils at planting, farmers have a new option to Read More
Corn Field
FertilizerProtect Applied Manure Straight From the Manure Pit to …
August 10, 2017
Farmers who use liquid manure to fertilize corn crops can now mix Instinct nitrogen stabilizer in their pit for easy Read More
Iowa waterways
Stewardship2,600 Iowa Farmers Commit $8.7 Million to Water Quality…
August 9, 2017
Iowa Secretary of Agriculture Bill Northey announced Tuesday that a record number of Iowa farmers signed up to install nutrient Read More
Natives-First-Purple_Prairie_Clover
Seed/BiotechLa Crosse Seed Continues Focus on Soil and Water Conser…
August 9, 2017
La Crosse Seed is doing its part to lead communication to ag retailers across the country on the importance of Read More
HerbicidesAg Secretary Perdue Comments on Dicamba Issue
August 9, 2017
Agriculture Secretary Sonny Perdue indicated to reporters this week that he would like to see the industry work out a Read More
Treated-Seed-in-planter
Seed/BiotechSeed Treatment Q&A: Insight from Iowa State’s…
August 8, 2017
Technology has changed drastically since the 1990s. Televisions are thinner, phones are smaller and tractors can steer themselves. Technology has Read More
soybeans
Seed/BiotechWhen and Why to Double Inoculate Your Soybeans
August 8, 2017
Double inoculation is the act of using a double application of a rhizobial inoculant. This quickly establishes high populations of Read More
Corn Field
Crop InputsMonsanto, Valent Expand Partnership in Roundup Ready PL…
August 7, 2017
Monsanto Co. and Valent U.S.A. LLC, a wholly-owned subsidiary of Sumitomo Chemical Co., Ltd., have announced today expanded partnership in Read More
Greg Musson, Gar Tootelian
CropLife 100Cause of Gar Tootelian Fire Under Investigation
August 7, 2017
Over one hundred firefighters and equipment responded to a four-alarm shop fire at the Gar Tootelian, Inc. (GAR) facility in Read More
Soybean Field
Seed/BiotechSyngenta Licenses Enlist Events
August 7, 2017
Syngenta has entered into non-exclusive licensing agreements with Dow AgroSciences LLC and M.S. Technologies, L.L.C. for the Enlist E3 Event Read More
ManagementThe News From InfoAg, and Dicamba Woes Continue
August 3, 2017
CropLife Editors Paul Schrimpf and Matthew Grassi discuss trends and topics that emerged at last week’s InfoAg Conference in St. Read More
FrontEntrancetoIntivityCentet
EquipmentAGCO Intivity Center Marks Five-Year Anniversary
August 3, 2017
Intivity Center, the official visitor center for AGCO Corp. in North America, commemorates five years of operation this summer. Opened Read More
Crop InputsMonsanto’s Fraley Addresses Dicamba Situation in …
August 3, 2017
Monsanto Chief Technology Officer Robb Fraley — a man who has seemingly been at the center of Monsanto’s PR campaign Read More